Business rates are a necessary evil for all businesses operating in the UK. These levies on non-domestic properties are a vital source of revenue for local councils, helping to fund essential public services and infrastructure. However, when a commercial property sits empty, the issue of business rates becomes a complicated and sometimes contentious one.
The government imposes business rates on most non-domestic properties, including shops, offices, and warehouses. The amount payable is based on the rateable value of the property, which is determined by the government’s Valuation Office Agency (VOA). This rateable value is then multiplied by the uniform business rate (UBR) set annually by the government.
One of the key issues surrounding business rates on empty commercial property is the concept of “empty property rates.” In the UK, commercial property owners are required to pay business rates on empty properties, albeit at a reduced rate. This policy is meant to incentivize property owners to bring their vacant properties back into use and deter them from leaving properties vacant long-term.
The current policy on empty property rates states that businesses may claim full relief from business rates for the first three months that a property is empty. After this initial three-month period, businesses will be required to pay 100% of the business rates due unless the property falls under specific exemptions.
There are certain exemptions to the empty property rates policy. For instance, properties with a rateable value of less than £2,900 are exempt from empty property rates entirely. Additionally, listed buildings, properties with specific planning restrictions, and properties owned by charities or community amateur sports clubs may also be eligible for exemptions.
Despite these exemptions, many business owners find themselves facing hefty business rates bills on their empty commercial properties. This can be a significant financial burden, especially for small businesses that may be struggling to stay afloat during challenging economic times.
One of the main criticisms of the current empty property rates policy is that it penalizes businesses for circumstances beyond their control. For example, a property owner may be unable to find a tenant for their vacant property due to market conditions or external factors such as the COVID-19 pandemic.
Furthermore, the current policy may discourage property owners from investing in refurbishing or renovating their empty properties, as doing so could trigger a revaluation by the VOA and result in higher business rates bills.
In response to these criticisms, various stakeholders have called for reforms to the empty property rates policy. For example, some have suggested extending the initial three-month relief period for empty properties to provide property owners with more time to find tenants or buyers.
Others have proposed introducing more flexibility into the system, allowing property owners to claim relief on a case-by-case basis depending on the circumstances surrounding the vacancy. This could help ensure that businesses are not unfairly penalized for factors beyond their control.
In addition to calls for reform, there are also practical steps that businesses can take to navigate the complex world of business rates on empty commercial property. For example, property owners should ensure that they are aware of all available exemptions and relief schemes that they may be eligible for.
Seeking professional advice from a chartered surveyor or commercial property consultant can also be beneficial in helping businesses understand their rights and obligations regarding business rates on empty properties. These professionals can provide valuable guidance on navigating the intricacies of the business rates system and help businesses minimize their tax liabilities.
Ultimately, the issue of business rates on empty commercial property is a complex and multifaceted one. While the current policy may have its shortcomings, there are opportunities for reform and practical steps that businesses can take to manage their business rates liabilities effectively.
By staying informed, seeking professional advice, and advocating for policy changes, businesses can work towards a fairer and more equitable system that supports economic growth and incentivizes property owners to bring their vacant properties back into productive use.